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The history of cement industry in Pakistan

The history of cement industry in Pakistan dates back to 1921 when the first plant was established at Wah. At the time of independence in 1947 there were four cement factories with an installed capacity of 470,000 tons per annum. These units were located at Karachi, Rohri, Dandot and Wah. In 1956 Pakistan Industrial Development Corporation (PIDC) established two plants at Daudkel and Hyderabad and subsequently more plants were established in the private sector The industry was nationalized in 1972 and the State Cement Corporation of Pakistan (SCCP) was established following the Economic Reforms Order, 1972. As a result of nationalization, a total of 10 cement units with an installed capacity of 2.8 million tons per annum were transferred to the SCCP. Effective price control was also vested with the SCCP and for a long time the industry operated under a regime of strict regulation and price control. While the cement industry was working under state control, the SCCP established five new units with an installed capacity of 1.8 million tons per annum. In 1985-86 the cement industry was deregulated and private sector was allowed to establish cement plants. But bulk of the capacity was controlled by the SCCP which had effective control in the fixation of prices. Severe shortage of cement and price deregulation prompted the private sector to establish more plants. Seven units were established in the private sector before commencement of the process of privatization in 1991. During the regime of Nawaz Sharif the industry went through major transformation. The government embarked upon an ambitious privatization programme and eight units have been privatized so far. The SCCP at present controls less than 25% of the total installed capacity in the country which is shrinking with the establishment of more plants in the private sector and expansion in the privatized units. The units working under the SCCP control are old and inefficient using 'wet process' whereas the units established in the private sector are new, efficient and use 'dry process'. Cement manufacturing is a high capital- and energy-intensive industry. The capital cost of a 2000 tons per day (TPD) plant ranges between Rs. 3.5 billion to Rs. 4 billion whereas the capital cost of a 3000 TPD plant is estimated at more than Rs. 5.5 billion. Energy consumption by cement manufacturing units based on 'wet process' is higher than 'dry process'. The 'dry process' is estimated to be economical by 40% to 50% compared to 'wet process'.

Cement Industries in Pakistan

The cement industry in Pakistan has come a long way since independence when the country had less than half a million tons per annum production capacity. By now it has exceeded 10 million tons per annum as a result of establishment of new manufacturing facilities and expansion by the existing units. Privatization and effective price decontrol in 1991-92 heralded a new era in which the industry has reached a level where surplus production after meeting local demand is expected in 1997.

The cement industry in Pakistan faces two serious threats: closure of units based on wet process, and poor cash flow rendering the units incapable of debt servicing due to increasing cost of electricity, furnace oil and imported craft paper used for cement packing. The cost of furnace oil alone has increased by nearly 100% in the last 15 months alone. With the increase in furnace oil the increase in electricity tariff has also become inevitable.

Pakistan has remained a net importer of cement but due to the privatization of units operating under state control and subsequent expansion programmes by the new owners supported by financial has pushed the industry to a point where the country is bound to reach an oversupply situation. However, the recent increase in energy cost provides opportunity for the efficient units based on dry process to sustain the situation for a relatively longer period. It would also be possible because the expansion by the existing units and establishment of new units are being delayed.

Pakistan's cement market is divided into two distinct regions, North and South. The northern region comprises the Punjab, NWFP, Azad Kashmir and upper parts of Balochistan, whereas the southern region comprises the entire province of Sindh and lower parts of Balochistan. Traditionally, the southern region has always been surplus in cement production but with the establishment of more plants in the northern parts of the country the region has become almost self-sufficient in supply of cement.

Cement Plants in Northern Region

1) Associated (Wah) 2) D.G. Khan 3) Cherat 4) Pioneer 5) Mustehkam 6) Fecto 7) Kohat 8) Gharibwal 9) Maple Leaf 10) Dundot 11) Lucky Cement Sub-Total

(000 tonnes) per annum

900 1,710 720 660 660 600 330 540 1,460 480 1,200 7,580

Cement Plants in Southern Region

12) Zeal Pak 13) Attock 14) Javedan 15) Pakland 16) Dadabhoy 17) Thatta 18) Associated (Rohri) 19) Essa Sub Total 880 660 500 540 450 280 230 150 3,690

Cement Plants Under Construction

20) Saadi 21) Lucky 22) Army welfare 23) Fauji 24) Chakwal Sub-Total Grand Total 960 1200 660 900

5,370 16,640

Demand vs supply
The demand-supply gap which for the last decade was in favour of manufacturers is now set to switch the other way with supply outpacing demand by the end of 1997. Historically, demand has grown at an average rate of 7%, with the Northern region averaging 8% and Southern region lagging behind at 4%. There is much pessimism about the industry's future due to a tremendous increase in supply expected by the end of next year. The way new plants are being established and existing plants are undertaking expansion, the demand-supply equation is bound to create surpluses. However, it has been observed that actual progress is slower than planned to avoid a possible glut situation. This will effectively narrow down the gap between demand and supply and thereby ease the pressure on prices. Factors which can possibly change the surplus position into a near-equilibrium between demand and supply are:-

1. 2. 3. 4.

Formation of manufacturers' cartel to avoid price decline; Delay in implementation of planned additions and expansions; Efforts to export cement; and Increase in demand if construction of some of the mega-sized infrastructure projects starts

DG Cement

D.G. Khan Cement

D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the largest cement-manufacturing unit in Pakistan with a production capacity of 5,500 tons clinker per day. It has a countrywide distribution network and its products are preferred on projects of national repute both locally and internationally due to the unparallel and consistent quality. It is list on all the Stock Exchanges of Pakistan.

DGKCC was established under the management control of State Cement Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started its commercial production in April 1986 with 2000 tons per day (TPD) clinker based on dry process technology. Plant & Machinery was supplied by UBE Industries of Japan.

Acquisition of DGKCC by Nishat Group:

Nishat Group acquired DGKCC in 1992 under the privatization initiative of the government. Starting from the privatization, the focus of the management has been on increasing capacity as well as utilization level of the plant. The company undertook the optimization by raising the capacity immediately after the privatization by 200tpd to 2200tpd in 1993.

Capacity Addition:
To meet the increasing demand and to capitalize on its geographic location, the management further expanded the capacity by adding another production line with a capacity of 3,300 tons per day in year 1998. Design of the new plant is based on latest dry process technology, energy efficient and environmental protection from particulate pollution according to the international standards. The plant and machinery was supplied by M/s F.L. Smidth of Denmark. As a result, DGKCC emerged as the largest cement production plant in Pakistan with annual production capacity of 1,650,000 M tons of clinker (1,732,000 M.Tons Cement) constituting about 10% share of the total cement production capacity of the country. The optimization plan is still underway to increase the total capacity of the two units to 6700 TPD by mid of 2005 from 5500 TPD at present.

Cement Manufacturing Process:

1. The cement manufacturing process begins when limestone, the basic raw material used to make cement, is transported by rail to the Edmonton plant from the Cadomin limestone quarry 220 kilometres west of Edmonton.

2. The limestone is combined with clay, ground in a crusher and fed into the additive silos. Sand, iron and bottom ash are then combined with the limestone and clay in a carefully controlled mixture which is ground into a fine powder in a 2000 hp roller mill.

3. Next, the fine powder is heated as it passes through the Pre-Heater Tower into a large kiln, which is over half the length of a football field and 4.2 metres in diameter. In the kiln, the powder is heated to 1500 degrees Celsius. This creates a new product, called clinker, which resembles pellets about the size of marbles.

4. The clinker is combined with small amounts of gypsum and limestone and finely ground in a finishing mill. The mill is a large revolving cylinder containing 250 tonnes of steel balls that is driven by a 4000 hp motor. The finished cement is ground so fine that it can pass through a sieve that will hold water.

5. The cement manufacturing process consists of many simultaneous and continuous operations using some of the largest moving machinery in manufacturing. Over 5000 sensors and 50 computers allow the entire operation to be controlled by a single operator from a central control room.

DG Cement Manufacturing Process

1) Quarrying:

2) Raw material Crushing & Storage:

3) Raw Meal Grinding & Storage:

4) Pre-Heater:

5) Kiln:

6) Fuel Storage:

7) Clinker Cooler:

8) Cement Milling:

9) Cement Dispatch:

Export of DG Cement from Pakistan:

We are exporting Ordinary Portland Cement (OPC 42.5 N/R), Sulphate Resistant Cement (SRC) and Slag Cement from Pakistan at very competitive prices to diferent destinations like UAE (Dubai), Kuwait, Iraq, Qatar, Djibouti, Afghanistan, South Africa India, Srilanka and other South Asian destinations. We also provide Clinker in large quantities to milling units. The growth in demand of cement in Asia, India, Middle East and Africa whereas particularly supply deficit in India and China has geared up export opportunities for Cement Industry of Pakistan. The demand of Pakistan origin cement will also be supported by closing down of some cement units in Europe due to their strict laws governing pollution control and other environment hazards. Pakistan having many big cement units and due to big reserves of raw material, the import of Cement from Pakistan is the prime of choice of the International buyers all over the world.

Cement Specifications and Standards:

We export Ordinary Portland Grey Cement, Grade 42.5 conforming to following standards:

EUROPEAN Specification: DIN EN 197-1, BRITISH Specification: BSS 12/1996 AMERICAN Specification: ASTM C-150. Pakistan Specification: PS-232-2008 (R) Grade 43

In addition to above we have also attained approval certifications from many countries including India, South Africa & Srilanka for our cement. We export cement from our state of theart plants who maintain Uniformity, Strict Quality Control, ISO 14001 & ISO 9001 certified and rely on SGS reports.

Packing & Transportation:

We offer top quality cement in 50Kg Polypropylene woven bags or 1 Tonne Jumbo Bags for sea-worthy transportation with sufficient safeguard against moisture. We have our own logistics support for transportation of containerized shipments from factory to loading port in Karachi. Our years of experience in sea transportation and freight ensure safe and on time delivery of shipments at destination ports. Special requirements for Bulk shipment and Self Discharge Pneumatic Vessel is also available.

Payment Terms:
Depending upon ordered quantity we accept payment by multiple methods preferably Irrevocable Letter of Credit by first class non-African bank. Revolving L/C is advised for big order with weekly shipments. We prefer advance payment for small trial orders of 20 containers.